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Item 1. Financial Statements

2026-08-13 compared with 2026-05-14 · 756 added, 770 removed, 150 unchanged (91% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

thousands, except per share data)

and Cash equivalents

expenses and other assets, current

thousands, except for share and per share data)

June 30, 2026

Current Assets:

expenses, non-current

AND STOCKHOLDERS’ EQUITY

payable and accrued expenses

securities liabilities

liability, current

Cash and cash

Restricted cash

expenses and other current assets

Total current assets

Digital assets

Right-of-use asset

Fixed assets, net

Intangible assets, net

Other non-current assets

Liabilities and Stockholders’

Current Liabilities

liability, non-current

feature liability - Convertible Notes

STOCKHOLDERS’

Accounts payable and accrued

Conversion feature liability - convertible notes

Convertible notes, net

Lease liability, current

Other current liabilities

Derivative securities liabilities

Total current liabilities

Conversion feature liability - convertible

Convertible notes, net

Deferred tax liabilities

Lease liability, non-current

Total long term liabilities

Stockholders’ Equity

Preferred stock;

50,000,000 authorized shares;

no shares issued and outstanding as of March 31, 2026 and December 31, 2025

no shares issued and

outstanding as of June 30, 2026 and December 31, 2025

Common stock;

550,000,000 authorized

shares issued and 82,056,573

shares outstanding as of March 31, 2026, 85,166,604

shares issued and 84,327,208

shares outstanding as of December 31, 2025

Treasury stock, at

shares and 839,396

shares as of March 31, 2026 and December 31, 2025, respectively

$ 0.001 par value;

550,000,000 authorized shares;

shares issued and 88,574,486 shares outstanding as of June 30, 2026, 85,166,604 shares issued and 84,327,208 shares outstanding as

of December 31, 2025

Treasury stock, at cost;

6,077,426 shares and 839,396 shares as of June

30, 2026 and December 31, 2025, respectively

Additional paid-in capital

stockholders’ equity

Accumulated deficit

Total stockholders’

liabilities and stockholders’ equity

1 unchanged sentence

FINANCIAL, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

thousands, except per share data)

and administrative

from operations

income (expense):

in fair value of digital assets

in fair value of Convertible Notes conversion feature

loss on put option liability

on extinguishment of debt

and dividend income

loss before taxes

CONSOLIDATED STATEMENTS OF OPERATIONS

thousands, except for share and per share data, unaudited)

from June 10, 2025 (Inception) through

Operating Expenses

General and administrative

Stock-based compensation

Operating Expenses

Operating Loss

Other Income (expense)

Unrealized (loss)

gain on digital assets

Realized loss on

digital assets

Change in fair value of

convertible notes conversion feature

Realized loss on put option

Gain on extinguishment

Interest and dividend income

Interest expense

in fair value of derivative liability

(expenses) income, net

(Loss) Income Before Taxes

$ ( 175,310 )

average number of shares of common stock outstanding, basic and diluted

loss per common stock, basic and diluted

Income tax benefit

(Loss) Income

$ ( 172,806 )

Weighted average number of shares of common stock outstanding, basic

Net (loss) income per common stock,

Weighted average number of shares of common stock outstanding diluted

Net (loss) income per

common stock, diluted

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FINANCIAL, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

thousands, except per share data, unaudited)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

thousands, except for share and per share data, unaudited)

Three Months Ended June 30, 2026

Preferred Stock

Treasury Stock

Additional Paid In

Stockholders’

December 31,2025

of treasury stock

Balance as of March 31, 2026

( 3,506,452 )

Issuance of restricted stock, net of withholding taxes

March 31, 2026

$ ( 136,735 )

Stock-based compensation

Issuance of common stock upon settlement of RSU

Purchase of treasury stock

( 2,570,974 )

Shares issued on acquisition of Silvia

Balance as of June 30, 2026

( 6,077,426 )

$ ( 201,782 )

Months Ended June 30, 2026

Preferred Stock

Treasury Stock

Additional Paid In

Stockholders’

Balance as of December 31, 2025

Stock-based compensation

Issuance of common stock upon settlement of RSU, net of tax

Purchase of treasury stock

( 5,238,030 )

Shares issued on acquisition of Silvia

Balance as of June 30, 2026

( 6,077,426 )

$ ( 201,782 )

the period from June 10, 2025 (inception) to June 30, 2025

Preferred Stock

Treasury Stock

Total Stockholders’

Balance, June 10, 2025 (inception)

Issuance of common units pursuant to the Investment Consulting and Marketing Services Agreement

Issuance of preferred units

Issuance of preferred units, related party

Balance as of June 30, 2025

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FINANCIAL, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

thousands, unaudited)

For the three

March 31, 2026

FLOWS FROM OPERATING ACTIVITIES

June 10, 2025

(Inception) through

Cash flows from operating

Net (loss) income

$ ( 172,806 )

to reconcile net loss to net cash used in operations:

in fair value of digital assets

loss on put option liability

of right-of-use asset

on extinguishment of debt

in fair value of Convertible Notes conversion feature

based compensation

of discount and debt issuance costs on Convertible Notes

in operating assets and liabilities:

expenses and other current assets

payable and accrued expenses

USED IN OPERATING ACTIVITIES

FLOWS FROM INVESTING ACTIVITIES

of digital assets

Adjustments to reconcile

net (loss) income to net cash used in operating activities:

Unrealized loss (gain)

on digital assets

Gain on extinguishment

Stock based compensation

Depreciation and amortization

Amortization of discount

and debt issuance costs on Convertible Notes

Realized loss on digital

Change in fair value of

derivative liability

Realized loss on put option

Change in fair value of

convertible notes conversion feature

Amortization of right-of-use

Changes in operating assets

and liabilities:

Accounts payable and other

current liabilities

Deferred tax liabilities

Escrow account

Due to investors

Prepaid expenses and other

current assets

Other non-current assets

Due to related party

cash used in operating activities

Cash flows from investing

Purchases of digital assets

Sales of digital assets

Acquisition of CFO Silvia,

net of cash acquired

of fixed assets

USED IN INVESTING ACTIVITIES

FLOWS FROM FINANCING ACTIVITIES

of Convertible Notes

from derivative securities

of derivative securities

paid on RSU vesting

of treasury stock

USED IN FINANCING ACTIVITIES

CHANGE IN CASH

cash equivalents and restricted cash, beginning of period

cash equivalents and restricted cash, end of period

cash used in investing activities

Cash flows from financing

Payments of Convertible

Purchase of treasury stock

Purchase of derivative

Taxes paid on RSU vesting

Settlement of derivative

Proceeds from derivative

from issuance of preferred units

cash (used in) provided by financing activities

Net decrease in cash and

cash equivalents

Cash, cash equivalents,

and restricted cash, beginning of period

Cash and cash equivalents,

end of period

Non-cash investing and financing

Common stock issued as

consideration for CFO Silvia Acquisition

Share-settled earnout consideration

for CFO Silvia Acquisition

Contribution of digital

assets for preferred units

Contribution of digital

assets for preferred units, related party

Initial recognition of

conversion feature liability

Conversion of due to related

party to a promissory note, related party

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

thousands, except share, per share data , Bitcoin, and per Bitcoin data )

in 2025, ProCap Financial, Inc., together with its subsidiaries (collectively, the “Company” or “ProCap”), is

a U.S.-based modern finance company.

Financial, Inc.

(the “Company” or “ProCap”) was founded in June 2025 and, together with its subsidiaries, is

a U.S.-based modern finance company focused on developing technology-enabled products and services that leverage artificial intelligence

(“AI”), data analytics, and automation to support financial analysis, investment research, and investor decision support.

The Company’s mission is to help independent investors make money.

The Company initially launched

with Bitcoin-focused media products and Bitcoin holdings on its corporate balance sheet.

believes that Bitcoin represents a superior long-term store of value and a viable alternative to traditional fiat-based reserve assets

and that Bitcoin will play an increasingly important role as a reserve asset for individuals, corporations, and governments worldwide.

A key objective of the Company is to support the broader Bitcoin information ecosystem, including through audio podcasts, video interviews,

and text-based articles designed to help individuals and organizations understand Bitcoin’s significance and utility of its mission.

To support its operations, the Company has initiated its plan to accumulate and hold Bitcoin as a long-term treasury reserve asset.

Company’s business is also built upon a foundational belief that advances in artificial intelligence (“AI”) may enable more

scalable and efficient tools for portfolio analysis, financial planning, and investor decision support.

Consistent with this

approach, the Company expects to increasingly rely on software-based systems and automated processes as part of its operating model.

In 2026, the Company added strategies related to the use of AI and automation to support the development and delivery of financial

products and services, including the launch of ProCap Insights and the acquisition of CFO Silvia, Inc, a Delaware corporation

(“CFO Silvia”) in April 2026.

See Note 15 for further details relating

to the transaction.

The Company launched ProCap Insights, the first

agentic research platform in finance, in April 2026.

Leveraging the latest AI technology, ProCap aims to deliver institutional-grade research

to help independent investors make more informed investment decisions.

Silvia has developed a consumer-facing AI platform that aggregates and organizes financial data to provide users with automated financial

education, tracking and analytical tools.

The CFO Silvia platform connects to financial account integrations, including brokerage accounts,

retirement accounts, crypto currency wallets, real estate valuation services, and alternative investment platforms, to deliver users

a consolidated, real-time view of their net worth, holdings and liabilities.

platform utilizes AI-driven analytical tools to perform portfolio tracking, concentration analysis, fee analysis, scenario modeling,

and informational financial summaries through a conversational interface accessible via chat, email, and voice.

The platform is designed

to surface potential portfolio risks, including sector or asset class overconcentration, elevated fee structures, and inefficient cash

The platform does not provide personalized investment advice within the meaning of the Investment Advisers Act of 1940 and

is not intended to serve as a registered investment adviser or replace the judgment of a qualified financial professional.

December 5, 2025, the Company completed a business combination with Columbus Circle Capital Corp I (“CCCM”), a special purpose

acquisition company, resulting in the Company becoming a publicly traded entity.

The transaction was accounted for as a reverse recapitalization

in accordance with U.S.

The Company deemed to be the accounting acquirer based on Accounting Standard Update No.

Business Combinations

(Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which

we early adopted.

connection with the transaction:

ProCap equity holders received an aggregate of approximately 74.6 million shares of the Company’s

common stock (after applying the exchange ratio, including preferred unit conversion).

shareholders received approximately 10.6 million shares, after significant redemptions.

common shares outstanding immediately following the transaction were approximately 85.2 million.

proceeds from the transaction were approximately $ 12.2 million, after redemptions and transaction

a result of the reverse recapitalization:

historical financial statements of ProCap became those of the Company.

prior-period equity amounts and share counts have been retroactively restated to reflect

the exchange ratio established in the transaction.

Additionally,

previously issued public and private placement warrants of CCCM remained outstanding and became warrants of the Company.

Liquidity and Capital Resources

of March 31, 2026, the Company had $ 25,964 in cash and cash equivalents and working capital of $ 25,466 .

the three months ended March 31, 2026, the Company reported a net loss of $ 107,759 .

This net loss was primarily driven by factors that

are inherently volatile and subject to market conditions, including:

losses related to Bitcoin holdings due to fluctuations in the market price of Bitcoin;

and administrative expenses associated with operating as a public company and stock-based compensation expense.

digital assets and derivative instruments are measured at fair value, the Company’s results of operations may fluctuate significantly

from period to period, as discussed further in “Note 4”.

of March 31, 2026, the Company had an aggregate of $ 99,600 of principal of Convertible Notes outstanding.

(See Note 7).

on the cash and cash equivalents balance of $ 25,964 as of March 31, 2026, and fair value of the Company’s Bitcoin holdings of $ 372,277 ,

the Company has determined that the Company’s sources of liquidity will be sufficient to meet the Company’s needs for the

one-year period from the issuance of these unaudited condensed consolidated financial statements.

Historically, the Company’s operations included investor-focused

media, educational content, and strategic investments designed to support independent investors through digital platforms and other content

On December 5, 2025, the Company

completed a business combination with Columbus Circle Capital Corp I (“CCCM”) (the “Transaction”), which was

accounted for as a reverse recapitalization in accordance with U.S.

generally accepted accounting principles (“GAAP”).

ProCap BTC, LLC (“ProCap BTC”) was determined to be the accounting acquirer and CCCM was treated as the acquired company

for financial reporting purposes.

The Company was deemed to be the accounting acquirer based on Accounting Standard Update No.

Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition

of a Variable Interest Entity, which we early adopted.

Following the Transaction, ProCap became the publicly traded parent

company, and ProCap BTC became its operating subsidiary.

As a result, the historical financial statements of ProCap BTC became the

historical financial statements of the Company.

Accordingly, the comparative financial information presented for periods prior to

the Transaction, including the period from June 10, 2025 (inception) through June 30, 2025, reflects the historical results of

In April 2026, the Company expanded its strategic

focus through investments in AI-enabled financial technology solutions designed to enhance portfolio analysis, financial planning, and

investor decision support.

As part of this initiative, the Company launched ProCap Insights, an agentic financial research offering,

and acquired CFO Silvia, Inc.

(“CFO Silvia”), an AI agent lab focused on finance.

The acquisition was completed on April

6, 2026, (the “Acquisition Date”), and CFO Silvia became a wholly owned subsidiary of the Company, see Footnote 3 – CFO Silvia

Acquisition for additional information.

Company’s results of operations for the three and six months ended June 30, 2026 reflect continued investment in the development

of its AI-enabled financial technology platform, strategic investments, Bitcoin holdings and the acquisition and

integration of CFO Silvia.

Summary of Significant Accounting Policies

of Presentation

accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles

generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 8-03 of Regulation

Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required

by GAAP for audited financial statements.

The condensed consolidated balance sheet as of December 31, 2025 included herein was derived

from audited financial statements but does not include all disclosures required by GAAP for complete financial statements.

In the opinion

of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting

of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of March 31, 2026, the

results of its operations for the three months ended March 31, 2026, cash flows for the three months ended March 31, 2026, and stockholders’

equity for the three months ended March 31, 2026.

The results of operations for the three months ended March 31, 2026 are not necessarily

indicative of the results to be expected for the full year.

The preparation of condensed consolidated financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures,

as of the date of the financial statements, and the amounts of revenues and expenses reported during the period.

Actual results could

differ from estimates.

The accompanying condensed unaudited consolidated financial statements should be read in conjunction with the

Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2025.

Reclassification

prior-period amounts have been reclassified to conform to the current-period presentation in the unaudited condensed consolidated financial

statements and accompanying notes.

Specifically, amounts previously presented in “Other current assets” have been reclassified and combined

with “Prepaid and other current assets” to align with the current-year balance sheet presentation.

No other reclassifications were made.

These reclassifications did not have a material impact on the Company’s unaudited condensed consolidated financial statements,

related disclosures, or prior-period results.

accompanying condensed unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission.

they do not include all information and disclosures required by GAAP for complete annual financial statements.

In the opinion of management,

all adjustments considered necessary for a fair presentation of the interim periods presented have been included.

results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full

These condensed unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial

statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

of Consolidation

3 unchanged sentences

All intercompany transactions have been eliminated upon consolidation of these entities.

preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires management to

make certain estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate is the effect of

a condition, situation or set of circumstances that existed at the date of the financial statements, which could change in the near term

due to one or more future confirming events.

Significant accounting estimates include valuations of derivative liabilities and the valuations

of share-based awards.

Use of Estimates

The preparation of the accompanying unaudited condensed consolidated financial

statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and

disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during

the reporting period.

Making estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate is the effect of a condition, situation or set of circumstances that existed at the

date of the financial statements, which could change in the near term due to one or more future confirming events.

Significant accounting

estimates include the fair values of the assets acquired and liabilities assumed in the CFO Silvia acquisition, including acquired identifiable

intangible assets and their estimated useful lives, the fair value of the contingent consideration issuable under the share-settled earnout

arrangement, valuations of the conversion feature liability associated with the Convertible Note, and the valuations of share-based awards.

Accordingly, the actual results could differ significantly from those estimates.

280, “Segment Reporting” (“ASC 280”), defines operating segments as components of an enterprise where

discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”)

in deciding how to allocate resources and in assessing performance.

The Company operates as a 1 single

operating segment managed on a consolidated basis.

The Company’s CODM is the Chief Executive Officer, who has ultimate responsibility for the operating

performance of the Company and the allocation of resources.

The CODM uses net loss as the primary measure to manage the business

and does not segment the business for internal reporting or decision making.

Significant segment expenses are consistent with those presented on the condensed consolidated statement of operations

and total segments assets are consistent with total assets presented on the condensed consolidated balance sheets.

Concentration

of Credit Risk

instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, restricted cash,

The Company maintains its cash, cash equivalents, restricted cash, and Bitcoin with major financial institutions and reputed

Bitcoin custodians.

The Company’s cash consists of accounts held within financial institutions which, at times, may exceed federally

insured limits.

The cash balance in excess of the federally insured limits was $ 25,714

as of March 31, 2026, including cash accounts held through

Bitcoin custodians, Anchorage Digital Bank, N.A., and BitGo Trust Company, which totaled $ 4 .

Our Bitcoin is held offline in cold storage with multiple third-party providers.

As of March 31, 2026, approximately 60 %

of our Bitcoin was held at Anchorage Digital Bank, N.A., and approximately 40 %

of our Bitcoin was held at BitGo Trust Company.

The Company has historically not experienced any losses on its cash and investments in

relation to federally insured limits.

and Cash Equivalents

Company considers all short-term investments with an original maturity date of three months or less when purchased to be cash equivalents.

Company classifies cash as restricted cash when it is held in a separate bank account and its withdrawal or general use is legally restricted,

or when a portion of cash is designated as collateral.

The Company had restricted cash of $ 0 and $ 149,885 as of March 31, 2026 and December

31, 2025, respectively.

plant and equipment are stated at cost, less accumulated depreciation.

Betterments, renewals, and extraordinary repairs that materially

extend the useful life of the asset are capitalized;

other repairs and maintenance charges are expensed as incurred.

The Company includes

equipment, furniture and fixtures, and leasehold improvements in fixed assets, net.

Company’s depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets,

which results in depreciation being incurred evenly over the life of an asset.

Fully depreciated assets are retained in property and

accumulated depreciation accounts until they are removed from service.

Company includes in prepaid expenses payments made in advance for goods and services for which the Company will receive a future benefit.

Prepaid expenses are recorded at cost and are expensed over the period in which the benefit is realized.

value measurement

Company’s financial assets and liabilities are accounted for in accordance with FASB ASC Topic 820, Fair Value Measurements

and Disclosures (“ASC 820”) which defines fair value as the exchange price that would be received for an asset or paid

to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction

between market participants on the measurement date.

The fair value hierarchy requires an entity to maximize the use of observable inputs

when measuring fair value and classify those inputs into three levels:

1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.

2 — Observable, market-based inputs, other than quoted prices included in Level 1, for the assets or liabilities either directly

or indirectly.

3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market

Unobservable inputs require significant management judgment or estimation.

In some cases, the inputs used to measure an

asset or a liability may fall into different levels of the fair value hierarchy.

In those instances, the fair value measurement is

required to be classified using the lowest level of input that is significant to the fair value measurement.

Such determination

requires significant management judgment.

a result of the adoption of ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60):

Accounting for and

Disclosure of Crypto Assets (“ASU 2023-08”), the Company accounts for its qualifying crypto assets within the scope of ASC

Accordingly, such crypto assets are measured at fair value at each reporting date.

fair value of the Company’s digital assets is determined using the period-end closing price quoted on Coinbase, an active market,

in accordance with ASC 820, Fair Value Measurement.

Because digital asset markets operate on a continuous, 24-hour basis, the Company

uses the price as of 23:59:00 UTC Coordinated Universal Time (UTC) as of the reporting date.

Quoted prices for identical digital assets

in active markets represent Level 1 inputs in the fair value hierarchy.

in the fair value of digital assets are recognized as a change in fair value of digital assets within other income (expense) in the

unaudited condensed consolidated statement of operations.

When the Company sells digital assets, realized gains or losses are

measured as the difference between the cash proceeds received and the carrying value of the digital assets sold, as determined using

the first-in, first-out method.

Realized gains and losses are recorded in realized gain or loss on sale of digital assets in the

unaudited condensed consolidated statement of operations.

Company’s current treasury strategy is to retain Bitcoin as its primary treasury reserve asset.

Based on this strategy, the

Company classifies its digital assets as non-current assets on the unaudited condensed consolidated balance sheet.

The Company held

its Bitcoin with third-party custodians, consisting of approximately 3,300

Bitcoin as of March 31, 2026 and December 31 2025 respectively, with Anchorage Digital Bank, N.A.

and approximately 2,157

Bitcoin held with BitGo Trust Company, Inc.

as of March 31, 2026 and December 31, 2025 respectively.

The Company retains control

over the underlying digital assets held with these custodians.

Payable and Accrued Expenses

Company’s payables and accrued expenses result primarily from the administration of the Company.

The Company records accounts payable

upon receipt of a vendor invoice.

Accrued expenses are recognized when incurred, not when paid, to accurately reflect expenses within

the period they relate to, ensuring proper matching under accrual basis accounting.

Recognition Policy

Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Revenue is recognized

when control of promised services is transferred to customers in an amount that reflects the consideration to which the Company expects

to be entitled in exchange for those services.

Company typically provides advertising and marketing services through weekly digital media placements, including audio, and social media

advertisements.

Revenue is recognized over time, as the customer simultaneously receives and consumes the benefits of the services as

they are performed (ASC 606-10-25-27(a)).

For contracts in which services are provided evenly over the term of the arrangement, the Company

applies a time-elapsed (straight-line) measure of progress, as this method best reflects the pattern of satisfaction of the performance

payments are typically due upfront or within 30 days of service commencement.

Amounts invoiced and cash received upfront, but not yet

earned, are recorded as deferred revenue until the related services are performed.

evaluates all contracts to determine performance obligations, transaction price, variable consideration (if any), and the existence of

any significant financing components.

The Company does not typically incur incremental costs to obtain contracts;

therefore, no contract

costs are capitalized under ASC 340-40.

receivable represents amounts due from customers for services sold in the ordinary course of business and are initially recorded at the

original invoice amount.

Receivables are reported at net realizable value, net of an allowance for credit losses.

The allowance is estimated

using historical collection data, with uncollectible amounts written off when deemed uncollectable.

As of March 31, 2026, the Company

had no accounts

receivable outstanding.

As of December 31, 2025, accounts receivable totaled $ 45 ,

which were subsequently written off during the three months ended March 31, 2026.

the Company issues convertible debt, it first evaluates the balance sheet classification of the convertible instrument in its entirety

to determine:

(1) whether the instrument should be classified as a liability under ASC 480, and (2) whether the conversion feature should

be accounted for separately from the host instrument.

If it is determined that the conversion feature should be bifurcated from the host

instrument, it is then classified as a derivative liability on the unaudited condensed consolidated balance sheet and marked at fair

value at period-ends, with any changes in its fair value recognized in the unaudited condensed consolidated statement of operations.

Company records the Convertible Notes as a long-term liability at face value net of debt discount and debt issuance costs.

the conditions to the convertibility of the Convertible Notes are satisfied, or the Convertible Notes become due within one year, then

the Company may be required under applicable accounting standards to reclassify the carrying value of the Convertible Notes as a current

issuance costs related to the Convertible Notes were capitalized and are presented net against the balance of the Convertible Notes on

the unaudited condensed consolidated balance sheet.

Debt issuance costs consist of underwriting, legal and other direct costs related

to the issuance of the Convertible Notes.

The debt discount related to the Convertible Notes was capitalized and is presented net against

the balance of the Convertible Notes on the unaudited condensed consolidated balance sheet.

Debt issuance costs and debt discount are

amortized to interest expense over the term of the Convertible Notes using the straight-line method which approximated the effective

interest method using an effective interest rate of approximately 9.0 %.

Company accounts for its stock-based compensation awards in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”).

ASC 718 requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument

and to recognize it as an expense in the unaudited condensed consolidated statement of operations based on their grant award date fair

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

Loss Per Share

Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share” which requires

presentation of basic and diluted earnings per share (“EPS”) on the face of the statement of operations for all entities

with complex capital structures and requires a reconciliation of the numerator and the denominator of the basic EPS computation to

the numerator and denominator of the diluted EPS.

Basic net loss per share is computed by dividing net loss by the weighted average

number of common stock par value $ 0.001

(“Common Stock”) outstanding for the period.

It excludes the dilutive effects of any potentially issuable common shares.

Diluted net loss per share is calculated by including any potentially dilutive share issuance in the denominator and potentially dilutive securities are evaluated using the treasury stock metho d or

the if-converted method, as applicable .

For the three

months ended March 31, 2026, all potentially dilutive securities were not included in the calculation of diluted net loss per share

as their effect would be anti-dilutive.

computation of basic and diluted net loss per share for the three months ended March 31, 2026 is as follows:

of Computation of Basic and Dilutive Net Loss Per Share

$ ( 107,759 )

average number of shares of common stock outstanding, basic and diluted

loss per common stock, basic and diluted

As of March 31, 2026, the following potentially dilutive securities were

excluded from the computation of diluted net loss per share because their inclusion would have been anti-dilutive:

of Computation of Net Loss Per Common Stock

(See Note 10)

Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, which requires an asset and liability

approach to financial accounting and reporting for income taxes.

Deferred tax assets and liabilities are recognized for the estimated

future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities

and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

Valuation allowances are

established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and the measurement of

tax positions taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more likely

than not to be sustained upon examination by taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized

tax benefits as income tax expense.

The Company is currently not aware of any issues under review that could result in significant payments,

accruals or material deviation from its position.

The Company is subject to income tax examinations by major taxing authorities since

Company accounts for treasury stock using the cost method in accordance with U.S.

When the Company repurchases its own Common Stock,

the purchase price, including any directly attributable transaction costs, is recorded as treasury stock, a reduction to stockholders’

Treasury shares are not considered outstanding and therefore are excluded from the calculation of earnings per share and dividends.

treasury shares are reissued, the Company uses the average cost of the shares held in treasury to determine the cost basis.

of the reissuance price over the cost of the shares is recorded as an increase to additional paid-in capital.

If the reissuance price

is below cost, the difference is first charged to additional paid-in capital to the extent of previous net gains from treasury stock

any remaining shortfall is recorded as a reduction to retained earnings.

Company does not recognize gains or losses in the unaudited condensed consolidated statement of operations from the purchase, reissuance

or retirement of treasury stock.

If treasury shares are formally retired, the Company reduces Common Stock and additional paid-in capital

based on the original issuance amounts, with any difference between the carrying amount of the treasury shares and the amounts removed

from equity recorded in retained earnings.

and Capital Resources

of June 30, 2026, we had cash and cash equivalents of approximately $ 15.3 million

and working capital of approximately ($ 77.3 million).

The negative working capital resulted primarily from the Convertible Notes that can, at the option of the holders, be repurchased

for cash in June 2027 (see further in Note 7).

The Company believes it has sufficient resources to meet this potential obligation,

primarily through its holding of Bitcoin.

Company applies the provisions of the Accounting Standards Codification (“ASC”) 805, Business Combinations, in

accounting for its acquisitions.

The assets acquired and liabilities assumed are recognized at their acquisition date fair values,

and goodwill is measured as the excess of consideration transferred over the acquisition date fair values of the assets acquired and

the liabilities assumed.

While the Company uses its best estimates and assumptions to accurately value assets acquired and

liabilities assumed at the acquisition date, estimates are inherently uncertain and subject to refinement.

As a result, during the

measurement period, which shall not exceed one year from the acquisition date, the Company records adjustments to the assets

acquired and liabilities assumed with a corresponding offset to goodwill.

Upon the conclusion of the measurement period or final

determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are

recorded in the Company’s unaudited condensed consolidated statements of operations.

Company uses all available information to estimate fair values, including quoted market prices, the carrying value of acquired assets

and assumed liabilities and valuation techniques.

The judgments made in determining the estimated fair value assigned to each class of

assets acquired and liabilities assumed, as well as the useful lives of the assets acquired, can materially impact the Company’s

financial condition or results of operations.

Other estimates associated with the accounting for acquisitions may change as additional

information becomes available regarding the assets acquired and liabilities assumed.

assets are initially recorded at their estimated fair values as of the acquisition date and are amortized on a straight-line basis over

their estimated useful lives.

The Company reviews finite-lived intangible assets for impairment whenever events or changes in circumstances

indicate that the carrying amount may not be recoverable.

Intangible asset amortization expense of $ 1.2 million for the six months

ended June 30, 2026 is recorded within general and administrative expenses in the Company’s unaudited condensed consolidated statements

of operations.

on the carrying value of intangible assets at June 30, 2026, estimated amortization expense for the subsequent five years is as

follows (in thousands):

of Carrying Value of Intangible Assets

2026 (excluding the six months ended June 30, 2026)

represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination.

is not amortized but is tested for impairment at least annually and more frequently if events or changes in circumstances indicate that

impairment may exist.

The Company may perform a qualitative assessment to determine whether it is more likely than not that the fair

value of a reporting unit is less than its carrying amount.

If necessary, the Company performs a quantitative impairment test and recognizes

an impairment loss for the amount by which the carrying amount of the reporting unit exceeds its fair value, limited to the amount of

goodwill allocated to the reporting unit.

Company accounts for leases in accordance with ASC 842, Leases .

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consideration.

The Company has elected the practical expedient under ASC 842 to account

for lease and non-lease components as a single lease component for its studio lease.

Variable payments associated with cleaning services,

utilities, building amenities, and other operating costs are recognized as lease expense in the period incurred and are not included in

the measurement of the lease liability.

(“ROU”) assets represent the Company’s right to use an underlying asset over the lease term, and lease liabilities

10 unchanged sentences

on the balance sheet and lease payments are recognized as expense on a straight-line basis over the lease term.

are presented on the Company’s balance sheet as ROU assets, lease liability, current, and lease liability, non-current.

Cash payments

for operating leases are included in operating activities.

are presented on the Company’s unaudited condensed consolidated balance sheet as ROU assets, lease liability, current, and

lease liability, non-current.

Cash payments for operating leases are included in operating activities.

Accounting Pronouncements, recently adopted :

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Accounting Pronouncements, not yet adopted :

November 2024, the FASB issued (“ASU 2024-03”), “Income Statement-Reporting Comprehensive Income-Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (“ASU 2024-03”), requiring public entities

to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December

15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03.

Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently

adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.

In December 2024, the FASB issued ASU No.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40).

The update improves

financial reporting by requiring that public business entities disclose additional information about certain costs and expenses categories:

(a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion,

and amortization in the notes to financial statements at interim and annual reporting periods.

This update is effective for fiscal years

beginning after December 15, 2026, and early adoption is permitted.

Additionally, in January 2025, the FASB issued ASU No.

2025-01, Income

Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40).

2025-01 amends

the effective date of ASU No.

2024-03 to clarify the initial effective date for entities that do not have an annual reporting period that

ends on December 31, referred to as non-calendar year end entities.

All public business entities are required to adopt the guidance in

annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December

15, 2027, and early adoption is permitted.

The amendments should be applied prospectively with retrospective applications also permitted.

The Company is currently evaluating the impact the standard will have on its consolidated financial statements and related disclosures,

however, the Company does not expect the adoption of this guidance to have a material impact on the Company’s unaudited condensed

consolidated financial statements.

CFO Silvia Acquisition

the Acquisition Date, the Company acquired 100 %

of the outstanding equity interests of CFO Silvia (the “CFO Silvia Acquisition”)

pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Silvia Merger Sub, Inc., CFO

Silvia, Inflection Points Inc., Shain Noor, and Shain Noor as Stockholder Representative.

CFO Silvia is a financial technology company that has developed a consumer-facing

platform that organizes data and delivers financial summaries to users through an interactive interface.

The Company acquired CFO Silvia

largely to obtain access to the user platform, which management expects to leverage to broaden the Company’s product offerings.

prior to the closing of the CFO Silvia Acquisition, all outstanding options and other equity-linked interests of CFO Silvia were accelerated and

converted into equity interests in accordance with the terms of the Merger Agreement.

fair value of consideration transferred in connection with the CFO Silvia Acquisition was $ 23.3

million, consisting of the following:

Common stock consideration of $ 16.0

million, consisting of 8,416,951

shares of the Company’s common stock based on the Company’s closing stock price on the Acquisition Date of $ 1.90 , including 900,000

shares deposited into an escrow account to secure certain indemnification obligations for a period of twelve months following the

Acquisition date.

The former equity holders of CFO Silvia remain the beneficial owners of the escrowed shares and retain voting and

dividend rights during the escrow period.

Contingent consideration of $ 5.9 million related to fair value of 4,643,250 potential earnout shares issuable upon the achievement of

specified market-based conditions.

Pursuant to the Merger Agreement, the earnout shares will be issued if the Company’s common

stock price equals or exceeds $ 9.00 per share during the contractual measurement period.

The fair value of the contingent consideration

was estimated using a Monte Carlo simulation model that incorporated assumptions regarding expected stock price volatility, risk-free

interest rates and the probability of achieving the market condition.

The undiscounted range of outcomes associated with the arrangement

is either (i) no shares issued or (ii) issuance of 4,643,250 shares upon achievement of the specified market condition.

Cash consideration of $ 1.4 million related to the repayment of CFO Silvia’s indebtedness at closing.

connection with the CFO Silvia Acquisition, the Company also agreed to pay a $ 5.0 million signing bonus to Shain Noor.

This arrangement

was determined to be separate from the transaction and is accounted for as compensation expense.

In addition, certain earnout

share arrangements granted to Shain Noor were determined to be compensation arrangements and were accounted for as share-based compensation.

See Note 11, Share-Based Compensation, for additional information.

The following table summarizes the preliminary fair value of assets acquired

and liabilities assumed as of the Acquisition Date (In thousands).

Schedule of Assets Acquired And Liabilities Assumed

Cash and cash equivalents

Prepaid expenses and other current assets

Other non-current assets

Accounts payable and

other current liabilities

Deferred tax liabilities

Total net assets

The preliminary purchase price allocation resulted in the recognition of

identifiable intangible assets consisting of a trademark, non-compete agreement and user platform with estimated fair values of approximately $ 1.5 million, $ 2.3 million and $ 11.4 million, respectively.

trademark was assigned an estimated useful life of 10 years, while the non-compete agreement and user platform were each assigned estimated

useful lives of 3 years.

The purchase price allocation is preliminary and remains subject to measurement

period adjustments related to the finalization of certain income tax matters and the valuation of acquired assets and liabilities assumed.

Accordingly, the provisional amounts recognized at the Acquisition Date may be adjusted during the measurement period, which will not

exceed one year from the Acquisition Date.

The preliminary CFO Silvia Acquisition accounting resulted in the recognition

of goodwill of $ 12.7 million.

Goodwill is attributable primarily to expected synergies from integrating CFO Silvia’s proprietary

technology platform and related capabilities into the Company’s existing operations, as well as future growth opportunities and

the value of the assembled workforce that does not meet the criteria for separate recognition as an identifiable intangible asset.

goodwill recognized is not expected to be deductible for income tax purposes.

The Company incurred approximately

million of expenses directly related to the CFO Silvia Acquisition, which were included in “general and administrative

expenses” in the unaudited condensed consolidated statements of operations during the six months ended June 30, 2026.

Revenue and net loss attributable to

CFO Silvia included in the Company’s unaudited condensed consolidated statements of operations from April 6, 2026 through June

30, 2026 were $ 12

thousand and $ 8.4

million, respectively.

Pro Forma Operating Results

following unaudited pro forma consolidated financial information presents the results of operations of the Company for the three and

six months ended June 30, 2026, as if the CFO Silvia Acquisition had occurred on January 1, 2026.

Because CFO Silvia was incorporated on September 19, 2025, supplemental pro forma revenue and earnings information

for the three and six months ended June 30, 2025 has not been presented.

information gives effect to certain purchase accounting adjustments related to the CFO Silvia Acquisition and is based on the

historical financial statements of ProCap.

It is presented for illustrative purposes only and is not necessarily indicative of the

Company’s actual operating results had the CFO Silvia Acquisition occurred on January 1, 2026, nor is it indicative of future

results (In thousands).

Schedule of Proforma Information of Operations

the three months ended

June 30, 2026

the six months ended

June 30, 2026

Pro forma adjustments to net loss for the three months and six months ended

June 30, 2026 include adjustments for amortization of acquired identifiable intangible assets related to the CFO Silvia Acquisition.

Digital Assets

following table sets forth the units held, cost basis and fair value of crypto assets held, as shown on the balance sheet as of March

31, 2026 and December 31, 2025, respectively:

following table sets forth the units held, cost basis and fair value of crypto assets held, as shown on the balance sheet as of June

30, 2026 and December 31, 2025, respectively (In thousands, except for crypto asset quantities):

of Significant Digital Assets Holdings

of March 31, 2026

of June 30, 2026

of December 31, 2025

following table presents a reconciliation of the fair values of the Company’s digital assets as of March 31, 2026 based on the

fair value model under ASU 2023-08:

following table presents a reconciliation of the fair values of the Company’s digital assets for the six months ended June 30,

2026 (In thousands):

of Reconciliation of Digital Assets

assets fair value as of December 31, 2025

of digital assets

unrealized loss on digital assets

assets fair value as of March 31, 2026

vast majority of the Company’s assets are concentrated in its Bitcoin holdings.

Bitcoin is a digital asset, which is a novel asset

class that is subject to significant legal, commercial, regulatory and technical uncertainty.

Holding Bitcoin does not generate any cash

flows and involves custodial fees and other costs.

Additionally, the price of Bitcoin has historically experienced significant price

volatility, and a significant decrease in the price of Bitcoin would adversely affect the Company’s financial condition and results

of operations.

The Company’s strategy of acquiring and holding Bitcoin also exposes it to counterparty risks with respect to the

custody of its Bitcoin, cybersecurity risks, and other risks inherent to holding a digital asset.

In particular, the Company is subject

to the risk that, if its private keys with respect to its digital assets are lost or destroyed or other similar circumstances or events

occur, the Company may lose some or all of its digital assets, which could materially adversely affect the Company’s financial

condition and results of operations.

Digital assets

fair value as of December 31, 2025

Purchase of digital assets

Sales of digital assets

Net unrealized loss on digital assets

Realized loss on digital

assets fair value as of June 30, 2026

Prepaid Expenses and Other Current Assets

expenses and other current assets consisted of the following:

expenses and other current assets consisted of the following (In thousands):

of Prepaid Expenses and Other Current Assets

expenses and other assets:

expenses - current

current assets

prepaid expenses and other assets - current

expenses - non-current

Prepaid insurance

Prepaid other

Other current assets

Total prepaid expenses

and other current assets

Fixed Assets, net

assets consist of the following:

assets consist of the following (In thousands):

of Fixed Assets

and equipment

Furniture and equipment

Leasehold improvements

accumulated depreciation

fixed assets, net

the three months ended March 31, 2026, the Company recognized straight-line depreciation expense of $ 39 .

Long-Term Debt

net carrying value of the Company’s outstanding debt consisted of the following, as of :

Total fixed assets,

expense, calculated using the straight-line method, was approximately $ 26 thousand

and $ 65 thousand

for the three and six months ended June 30, 2026, respectively.

Depreciation expense for the period from June 10, 2025 (Inception)

through June 30, 2025 was $ 0 .

Convertible Note

net carrying value of the Company’s outstanding debt consisted of the following, as of (In thousands):

of Outstanding Debt

Notes due 2028

issuance costs, net (2)

(1) Discount as of

March 31, 2026 consisted of $ 7,050 of original issue discount and $ 4,629 for the initial fair value of the embedded derivative, less

accumulated amortization of $ 893 and gain on debt modification of $ 6,355 .

Convertible Notes due 2028

Discount, net (1)

Debt issuance costs,

as of March 31, 2026 consisted of $ 9,683 in debt issuance costs, less accumulated amortization of $ 741 and gain on debt modification

Management determined

the fair value of the Convertible Notes due 2028 as of March 31, 2026 and December 31, 2025 were $ 99,469 and $ 225,671 , respectively, based

on an implied Cost of Debt Capital of 0.05 % (Level 3 input).

A change in those inputs to a different amount might result in a significantly

higher or lower fair value measurement.

table below reflects the principal amount of loan maturities due over the next five years as of March 31, 2026:

of Loan Maturities

Loan Maturities Fiscal Year

Convertible Notes

table below presents the disaggregation of interest expense for the period March 31, 2026:

as of June 30,2026 consisted of $ 7.1

million of original issue discount

million for the initial fair value

of the embedded derivative, less accumulated amortization of $ 1.3

million, gain on debt extinguishment

issuance costs as of June 30, 2026 consisted of $ 9.7 million in debt issuance costs, less accumulated amortization of $ 1.1 million

and gain on debt extinguishment of $ 5.3 million.

determined the fair value of the Convertible Notes due 2028 as of June 30, 2026 and December 31, 2025 were $ 92.1 million and $ 225.7 million,

respectively, based on an implied yield of 8.72 % (Level 3 inputs).

A change in those inputs to a different amount might

result in a significantly higher or lower fair value measurement.

table below presents the disaggregation of interest expense for the period June 30, 2026 (In thousands):

of Disaggregation of Interest Expense

For the three

discount amortization

issuance cost amortization

Convertible Notes have a conversion rate of 76.9

shares per $ 1,000

equal to an approximately $ 13.00

conversion price, zero

interest rate, maturity of up to 36

months, and are collateralized by certain Bitcoin assets.

Under the indenture associated with the Convertible Notes, the Company

must maintain at all times a 1.0:1.0 (loan-to-collateral ratio compliance level) times collateralization of the Convertible Notes

using a mix of Bitcoin (with Bitcoin being valued at 50% for collateral calculation purposes), and cash and cash equivalents (with

the six-months ended

Debt discount amortization

Debt issuance cost

Interest expense, net

Convertible Notes have a conversion rate of 76.9 shares per $ 1,000 equal to an approximately $ 13.00 conversion price, zero interest rate,

maturity of up to 36 months, and are collateralized by certain Bitcoin assets.

Under the indenture associated with the Convertible Notes,

the Company must maintain at all times a 1.0:2.0 (loan-to-collateral ratio compliance level) times collateralization of the Convertible

Notes using a mix of Bitcoin (with Bitcoin being valued at 50% for collateral calculation purposes), and cash and cash equivalents (with

cash and cash equivalents being valued at 100% for collateral calculation purposes).

This note has an effective interest rate of 9.09 %.

Bank Trust Company, National Association serves as

collateral agent and trustee with regard to the Convertible Notes and associated indenture and security agreements.

March 31, 2026, the Company had 3,300

Bitcoin on deposit, of which only 2,929

Bitcoin were required to be used as collateral, at Anchorage Digital Bank, N.A as collateral for the Convertible Notes.

retains sole discretion and control over Bitcoin held as collateral.

Lenders have no rights to sell, pledge and re-hypothecate this

Convertible Note investor may, at its option, convert each $ 1,000 principal amount of their Convertible Note into a number of shares

of Common Stock equal to the conversion rate in effect on the conversion date, cash, or a combination of Common Stock and cash at any

time from the issue date until the close of business on the second scheduled trading date immediately before the maturity date.

conversion of the Convertible Notes meets the criteria for bifurcation and is recognized as a separate derivative instrument.

an event of default occurs, then the principal amounts on all the Convertible Notes then outstanding will immediately become due and

February 9, 2026, the Company entered into privately negotiated note repurchase agreements (the “Repurchase Agreements”)

with certain Noteholders (the “Noteholders”) of its outstanding Convertible Notes (the Repurchase).

Pursuant to the Repurchase

Agreements, the Company agreed to repurchase $ 135,400 in aggregate principal amount of the Convertible Notes for an aggregate cash purchase

price of $ 119,152 .

The outstanding principal balance of the Convertible Notes after the Repurchase was $ 99,600 .

accordance with ASC 470-50, Debt - Modifications and Extinguishments, the Company evaluated the Repurchase and determined that

it represents a debt extinguishment.

Accordingly, upon settlement, the Company derecognized a portion of the unamortized debt issuance

costs, debt discount and conversion feature derivative liability associated with the extinguished portion of the debt.

The Company recognized

a net gain on extinguishment of debt of $ 5,933 recorded in other income (expense) in the Company’s unaudited condensed consolidated

statement of operations for the three months ended March 31, 2026.

following table summarizes the net gain on the extinguishment of debt:

As of June 30, 2026, the Company had 3,515 Bitcoin

on deposit, of which only 3,404 Bitcoin were required to be used as collateral, at Anchorage Digital Bank, N.A as collateral for the

Convertible Notes.

The Company retains sole discretion and control over Bitcoin held as collateral.

Lenders have no rights to sell, pledge

and re-hypothecate this asset.

February 9, 2026, the Company entered into privately negotiated note repurchase agreements with certain holders of its outstanding Convertible

Notes and repurchased $ 135.4 million in aggregate principal amount for an aggregate cash purchase price of $ 119.2 million.

the transaction, $ 99.6 million aggregate principal amount of Convertible Notes remained outstanding.

The Company accounted for the transaction

as a debt extinguishment and recognized a gain on extinguishment of debt of $ 5.9 million during the six months ended June

following table summarizes the net gain on the extinguishment of debt (In thousands):

of Gain on Extinguishment of Debt

extinguishment

of the net carrying amount of the repurchased Convertible Notes

Derecognition

of debt discount

Derecognition

of debt issuance costs

Derecognition

of conversion feature derivative liability

Excess of the net carrying amount

of the repurchased Convertible Notes

Derecognition of debt discount

Derecognition of debt issuance costs

Derecognition of conversion

feature derivative liability

Company accounted for the cash payment as a financing activity in its unaudited condensed consolidated statement of cash flows.

The table below reflects the principal amount of loan

maturities due over the next five years as of June 30, 2026 (In thousands):

of Loan Maturities

5-Year Loan Maturities Fiscal Year

2028 Convertible Notes

Although the Convertible Notes mature in

December 2028, the holders have the right to require the Company to repurchase all or a portion of Convertible Notes for cash at a

price equal to 100% of outstanding principal amount anytime on June 5, 2027 (“Repurchase Date”).

Because the Repurchase

Date occurs within twelve months of June 30, 2026, the carrying amount of the Convertible Notes is presented as current in the

unaudited condensed consolidated balance sheet.

As of June 30, 2026, the Company held cash and cash equivalents

of approximately $ 15.3

million and 5,355

Bitcoin with an aggregate fair value of approximately $ 313.4

The principal payments reflected in

the contractual maturities table above assume that holders exercise their repurchase right on the Repurchase Date.

Fair Value Measurements

following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis and

the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2026 and December

the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2026 and December

31, 2025 (In thousands):

Schedule of Assets and Liabilities Measured at Fair Value

value measured at March 31, 2026

value measured at June 30, 2026

fair value at

March 31, 2026

June 30, 2026

prices in active markets

other observable inputs

feature liability - Convertible Notes

Digital assets

Conversion feature

liability - Convertible Notes

value measured at December 31, 2025

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prices in active markets

other observable inputs

securities liabilities

feature liability - Convertible Notes

determining the fair value of its Bitcoin investments, the Company uses quoted prices as determined by utilizing Coinbase closing prices

at 23:59:00 UTC on the last day of the reporting period.

As such, the Company’s digital assets were determined to be Level 1 assets.

Significant other

observable inputs

Digital assets

Derivative securities liabilities

Conversion feature

liability - Convertible Notes

Feature Liability - Convertible Notes

determining the fair value of Conversion Feature Liability, the Company utilized the Black-Scholes pricing model which is considered

to be Level 3 liability.

The key inputs are presented in the table below:

of Key Input Measurement For Fair Value

March 31, 2026

conversion feature liability associated with the Company’s Convertible Notes is measured at fair value using a Black-Scholes option

pricing model and is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs.

key inputs used in determining the fair value of the conversion feature liability are presented in the table below:

Schedule of Key Input Measurement For

June 30, 2026

December 31, 2025

(as a percentage)

term (in years)

rate (as a percentage)

following table presents a roll-forward of the Convertible Note Conversion Feature Liability as of March 31, 2026:

of Roll Forward Convertible Notes

feature derivative liability

at December 31, 2025

on debt extinguishment

in fair value

at March 31, 2026

Volatility (as a percentage)

Remaining term (in years)

Risk-free rate (as a percentage)

following table presents a roll-forward of the Convertible Note Conversion Feature Liability as of June 30, 2026 (In thousands):

Schedule of Roll Forward Convertible Notes

Conversion feature

derivative liability

December 31, 2025

Gain on debt extinguishment

Change in fair value

at June 30, 2026

Securities Liabilities

quoted market prices are not available, fair value is determined using a market-participant-based option pricing model.

The Company utilizes

a Black-76 valuation model to determine the fair value of BTC put options leveraging calibrated Bitcoin forward curves and volatility

surfaces daily at 4:00 PM ET using executable bid-offer prices and futures data sourced from Deribit by Coinbase.

These calibrated inputs

are applied across option strikes and maturities to derive fair-market pricing.

following table presents a roll-forward of the derivative securities liability as of March 31, 2026:

of Roll Forward Derivative Liability, Put Option

value as of December 31, 2025

of derivative securities

loss on put option liability

value as of March 31, 2026

December 2025, the Company sold Bitcoin put option contracts covering 630 Bitcoin, all of which expired unexercised in January 2026.

the three months ended March 31, 2026, the Company entered into multiple Bitcoin put option contracts with a single counterparty.

Company sold put options with an aggregate notional amount of up to 900 Bitcoin, with contractual strike prices ranging from $70,000

to $80,000 per Bitcoin and expiration dates in February and March 2026.

The Company received aggregate option premiums of $ 889 related

to put option contracts entered into during this period.

The Bitcoin put option contracts were not designated as hedging instruments.

February 2026, put option contracts covering an aggregate of 450 Bitcoin were exercised.

Upon exercise, the Company purchased the underlying

Bitcoin at the applicable contractual strike prices for an aggregate purchase price of $ 35,953 .

The acquired Bitcoin was recorded at

cost in accordance with the Company’s accounting policy for digital assets.

February and March 2026, the Company unwound two Bitcoin put option contracts covering an aggregate of 450 Bitcoin prior to expiration.

As a result of these unwind transactions, the Company recognized a loss of $ 1,342 , which was included within Realized loss on put option liability in the condensed consolidated statement of operations.

of March 31, 2026, the Company had no outstanding Bitcoin put option contracts.

As of December 31, 2025, the Company had outstanding

Bitcoin put option contracts with a fair value of $ 428 .

See Note 7 Long-Term Debt for fair value disclosures related to the Company’s Convertible Notes due 2028.

of December 31, 2025, the Company had outstanding Bitcoin put option contracts with a fair value liability of $ 0.4 million.

six months ended June 30, 2026, all outstanding Bitcoin put option contracts were exercised, expired, or otherwise settled, and the Company

recognized a realized loss of $ 0.9 million related to these contracts.

As of June 30, 2026, the Company had no outstanding derivative

securities liabilities.

Stockholders’ Equity

stock — The Company is authorized to issue 50,000,000 shares of preferred stock with a par value of $ 0.001 per share (the “Preferred Stock”).

As of March 31, 2026 and December 31, 2025, there

were no shares of Preferred Stock issued and outstanding.

Stock — The Company is authorized to issue 550,000,000 shares of Common Stock with a par value of $ 0.001 per share.

85,563,025 shares of Common Stock issued 82,056,573 shares outstanding as of March 31, 2026, and 85,166,604 shares of Common Stock issued

and 84,327,208 shares of Common Stock outstanding as of December 31, 2025.

Each share of Common Stock entitles the holder to one vote.

December 9, 2025, the board of directors of the Company (the “Board”) approved a share repurchase program (the

“2025 Repurchase Program”) providing for the repurchase of up to $ 100

million of the Company’s outstanding shares of Common Stock.

Under the 2025 Repurchase Program, the Company is authorized to

repurchase shares of Common Stock through open market purchases, privately-negotiated transactions, accelerated share repurchases,

or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule

10b-18 of the Exchange Act.

The 2025 Repurchase Program does not obligate us to repurchase shares of Common Stock and the specific

timing and amount of repurchases will vary based on available capital resources and other financial and operational performance

metrics, market conditions, securities law limitations and other factors.

In connection with the 2025 Repurchase Program, on December 12, 2025, the

Company entered into an Open Market Share Repurchase Agreement (the “Repurchase Agreement”) with TD Securities Inc.

(the “Broker”)

whereby the Broker has agreed to act as a non-exclusive agent on behalf of us to repurchase shares of Common Stock in the open market

pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act.

The Repurchase Agreement will continue in effect until terminated by either

the Company or the Broker, with or without cause, upon written notice to the other party.

The Company will pay the Broker a commission

at a rate of $0.01 for each share of Common Stock repurchased pursuant to the Repurchase Agreement.

the quarter ended March 31, 2026, the Company repurchased 2,667,056 shares of Common Stock in the open market for approximately $ 8.0 million including

commissions, at an average price of $ 3.00 per share.

$ 89 million remains under the approved 2025 Repurchase Program.

stock — The Company had treasury stock of 3,506,452 shares and 839,396 shares as of March 31, 2026 and December 31, 2025, respectively.

December 9, 2025, the board of directors of the Company (the “Board of Directors”) authorized a share repurchase program

providing for the repurchase of up to $ 100.0 million

of the Company’s Common Stock.

During the three months and six months ended June 30, 2026, the Company repurchased 2,570,974

and 5,238,030 shares of Common Stock for $ 4.8

million and $ 12.8 million respectively, including commissions.

During the three months ended June 30, 2026, the Company repurchased shares at an average price of $ 1.85

As of June 30, 2026, approximately $ 84.4

million remained available under the repurchase program.

In connection with the CFO Silvia Acquisition, the Company recognized an

equity-classified contingent consideration with a fair value of $ 5.9 million,

which was recorded within additional paid-in capital as part of the purchase

consideration.

The arrangement provides for the issuance of a fixed number of the Company’s common shares upon the achievement of specified

market-based conditions.

See Note 3, CFO Silvia Acquisition, for additional information.

computation of basic and diluted net loss per share for the three and six months ended June 30, 2026 is as follows (In thousands, except

for share and per share data):

of Computation of Basic and Diluted Net Loss per Share

the three months ended

Weighted average number

of shares of common stock outstanding, basic and diluted

Net loss per common

stock, basic and diluted

the six months ended

$ ( 172,806 )

Weighted average number

of shares of common stock outstanding, basic and diluted

Net loss per common

stock, basic and diluted

of June 30, 2026, the following potentially dilutive securities were excluded from the computation of diluted net loss per share because

their inclusion would have been anti-dilutive:

of Computation of Net Loss Per Common Stock

the three months ended

RSUs (See Note 11)

Convertible Notes

computation of basic and dilutive net income per common unit for the period from June 10, 2025 (inception) through June 30, 2025 is

as follows (In thousands, except for share):

For the Period

from June 10,2025

Weighted average number of shares of common

stock outstanding-basic

Net income per common stock, basic

change in fair value

of conversion feature

Net Income, diluted

Weighted average number of shares of common

stock outstanding-basic

Preferred Units

Weighted average number

of shares of common stock outstanding-diluted

Net income per common

stock, diluted

Share-Based Compensation

October 29, 2025, the Board adopted, and the Company’s stockholders approved

the ProCap Financial, Inc.

2025 Equity Incentive Plan (the “2025 Equity Plan”) whereby it may grant to employees, consultants

or non-employee directors an award, such as (1) options and stock appreciation rights, (2) performance stock, (3) performance stock units,

(4) restricted stock, and (5) restricted stock units of the Company.

aggregate number of shares which may be issued or transferred under the plan is equal to the sum of (i) 10% of the shares

outstanding post-closing of the business combination with Columbus Circle Capital Corp.

I and (ii) an annual increase on the first

day of each year beginning in 2026 and ending in (and including) 2035 equal to the lesser of (A) 5% of the shares outstanding on the

last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined by the Board or the

compensation committee of the Board.

of March 31, 2026, the Company issued restricted stock units (“RSUs”) under the 2025 Equity Plan.

Each RSU entitles the recipient

to one share of the Company’s Common Stock upon vesting.

The Company measures the grant date fair value of RSUs based on the nature

of the vesting conditions.

RSUs subject only to service-based vesting conditions, fair value is measured using the stock price on the grant date of $ 2.62 .

For the three months ended March 31, 2026, the Company granted an aggregate of 1,659,542 RSUs to certain employees with a total

grant-date fair value of $ 4,348 .

These awards vest quarterly over a 12-month service period, subject to continued employment.

RSUs subject to performance-based vesting conditions, including market-based share price targets, grant date fair value is determined

using a Monte Carlo valuation model which incorporates assumptions regarding volatility of 60 %, risk-free interest rate of 3.9 %, expected

term of 7 years, and stock price of $ 4.36 to calculate the probability of achieving the specified performance conditions, consistent

with ASC 718.

Performance-based RSUs will be forfeited to the extent any outstanding portion of the award remains unvested as

of the seventh anniversary of the date of the grant of the award or upon the employee’s termination of employment for any such

RSUs subject to market-based share price targets will be eligible to vest upon the achievement of the following share price vesting

conditions as long as the employee remains employed by the Company through the date in which the share price vesting condition is satisfied

for any five continuous business days where a share of Common Stock of the Company closes at or above the applicable share prices below:

of Restricted Stock Unit

of RSUs eligible to vest

table below presents the summary of activity with respect to, and status of restricted stock units for the three months ended March 31,

of Activity Restricted Stock Units

Grant Date Value

as of December 31, 2025

as of March 31, 2026

of March 31, 2026, there were 9,097,214

restricted stock units unvested and outstanding.

31, 2026, unrecognized compensation cost related to the grant of restricted stock units was $ 19,398

and had a remaining vesting period of approximately 0.35

years to 2.87

Stock-based compensation expense related to RSUs

recognized during the three months ended March 31, 2026 was $ 3,540

and is included in the accompanying unaudited condensed consolidated

statements of operations.

The Company’s effective tax rate for the three months ended March 31, 2026 was approximately ( 0.18 ) %.

The effective

tax rate differed from the U.S.

federal statutory tax rate primarily due to the impact of the valuation allowance recorded against deferred

The Company evaluates the realizability of deferred tax assets on a quarterly basis and records a valuation allowance

when it is more-likely-than-not that some portion or all of its deferred tax assets will not be realized.

As of March 31, 2026, the Company

maintained a valuation allowance against certain deferred tax assets based on management’s assessment of available positive and

negative evidence.

The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions and

remains subject to examination by applicable taxing authorities for all tax years since inception.

There are currently no federal or state

income tax examinations in process.

The Company recognizes the effect of income tax positions only if those positions are more-likely-than-not to be sustained

upon examination by the applicable taxing authorities.

As of March 31, 2026 and December 31, 2025, the Company had no unrecognized tax

benefits and had not accrued any interest or penalties related to uncertain tax positions.

The Company’s 2025 Equity Incentive Plan (the “2025 Equity Plan”)

is described in Note 13 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year

ended December 31, 2025.

The Company has elected to account for forfeitures as they occur.

Time-based restricted stock units

During the six months ended June 30, 2026, the Company granted 3,353,832

time-based restricted stock units (“RSUs”) under the 2025 Equity Plan to certain employees and service providers with aggregate

grant-date fair value of $ 7.7 million.

The awards generally vest over a service period ranging from 1 to 4 years.

For RSUs subject solely to time-based vesting conditions, grant-date fair

value is determined based on the closing market price of the Company’s common stock on the grant date.

During the six months ended

June 30, 2026, grant-date stock prices used to value such awards had a weighted average grant date

fair value of $ 2.27 per share.

The following schedule summarizes activity related to time-based RSUs for

the six months ended June 30, 2026:

Of Time Based RSU

Number of time-based

Restricted Stock Units

Weighted Average

Grant Date Fair Value

Unvested as of December 31, 2025

( 1,454,365 )

Unvested as of June

For the three and six months ended June 30, 2026, the Company recognized approximately $ 2.0 million and $ 4.2 million, respectively,

in share-based compensation expense from time-based RSUs.

As of June 30, 2026, unrecognized compensation cost related to unvested time-based

RSUs was $ 3.5 million, which is expected to be recognized over a weighted average remaining period of 1.2 years.

restricted stock units

In connection with the CFO Silvia Acquisition, the

Company granted Shain Noor the right to receive up to 4,356,450 shares of the Company’s common stock.

The award is subject to both

continued service and market condition requiring the Company’s common stock to achieve a trading price of $ 9.00 per share.

the award is contingent upon future employment and achievement of the market condition, it is accounted for as a share-based payment award

under ASC 718 and is excluded from the purchase consideration transferred in the transaction.

The award had a grant-date fair value of $ 5.1 million, which was determined

using a Monte Carlo valuation model.

The valuation incorporated assumptions regarding the Company’s stock price, expected volatility,

risk-free interest rate, expected term, and expected dividend yield.

Expected volatility was based on the historical volatility of the

Company’s common stock, and the risk-free interest rate was based on the U.S.

Treasury yield curve in effect on the grant date for

a term corresponding to the expected term of the award.

The following table summarizes the key assumptions used in the Monte Carlo

valuation of market-based awards granted during the six months ended June 30, 2026:

Schedule of Key Assumptions Used in the Valuation of Such Awards Granted

Expected volatility

Risk-free interest rate

Expected term

Expected dividend yield

The following table summarizes activity related to market-based RSUs for

the six months ended June 30, 2026:

Of Market-based RSU

Number of market-based

Weighted Average

Grant Date Fair Value

Unvested as of December 31, 2025

Unvested as of June

As of June 30, 2026, the market

condition associated with the award had not been satisfied and, accordingly, no shares subject to the award had vested.

For the three and six months ended June 30, 2026,

the Company recognized approximately $ 1.7 million and $ 3.1 million, respectively, in share-based compensation expense from market-based

As of June 30, 2026, unrecognized compensation cost related to unvested market-based RSUs was $ 18.1 million.

The remaining compensation

cost is expected to be recognized over the weighted average remaining period of 3.0 years.

Company’s effective tax rate for the six months ended June 30, 2026 and for the period from June 10, 2025 through June 30,

2025 was approximately 1.43 %

respectively.

During the second quarter ended June 30, 2026, the Company recognized a discrete income tax benefit of approximately

million related to the partial release of its valuation allowance on deferred tax assets.

The valuation allowance release was

supported by additional objectively verifiable positive evidence resulting from the scheduled reversal of acquisition-related

taxable temporary differences generated by the CFO Silvia Acquisition completed during the second quarter of 2026.

income tax benefit was the primary driver of the Company’s effective tax rates for the three and six months ended June 30,

The Company evaluates the realizability of deferred tax assets on a quarterly basis and records a valuation allowance when it

is more-likely-than-not that some portion or all of its deferred tax assets will not be realized.

As of June 30, 2026, the Company continued to maintain a valuation allowance against deferred

tax assets that management has concluded are not more-likely-than-not to be realized.

As of June 30, 2026 and December 31, 2025, the Company had no unrecognized

tax benefits and had not accrued any interest or penalties related to uncertain tax positions.

Commitments and Contingencies

of March 31, 2026, the Company did not have any material commitments except as noted below.

June 2025, the Company and Inflection Points, an entity under common control, entered into an Investment Consulting and Marketing Services

7 unchanged sentences

consideration, Inflection Points received an aggregate of 10,000,000 shares of the Company’s stock on December 5, 2025.

March 31, 2026, these shares have been issued and are outstanding.

Earnout Agreement

December 3, 2025, the Company and Columbus Circle 1 Sponsor Corp, LLC, a Delaware limited liability company (“Sponsor”) entered

into an agreement (the “Sponsor Earnout Agreement”), providing that 8,333,333 shares of the Company’s stock (such shares

subject to earnout, the “Earnout Founder Shares”), shall be subject to transfer restrictions set forth in the Sponsor Earnout

Agreement (the “Sponsor Transfer Restrictions”) and shall vest and be released from such restriction only if certain price

targets are achieved during the two-year period (the “Earnout Period”).

Sponsor Earnout Agreement provided that the Earnout Founder Shares shall vest and shall no longer be subject to the Sponsor Transfer

Restrictions as follows:

of the Earnout Founder Shares will vest and shall no longer be subject to the Sponsor Transfer Restrictions if the closing price

of the Company stock equals or exceeds $10.21 per share (as may be adjusted) for any 20 trading days within any consecutive 30-trading

day period during the Earnout Period (the “Share Price Trigger Event”).

of the Earnout Founder Shares will vest and shall no longer be subject to the Sponsor Transfer Restrictions if the BTC VWAP (as defined

below) equals or exceeds $140,000 during any five-day period during the Earnout Period (the “BTC Price Trigger Event”).

the event that neither a Share Price Trigger Event nor a BTC Price Trigger Event has occurred on or prior to the second anniversary,

then, subject to the terms and conditions of the Sponsor Earnout Agreement, 100% of the Earnout Founder Shares will vest and will no

longer be subject to the Sponsor Transfer Restrictions.

Notwithstanding

the foregoing, in the event that during the Earnout Period, the Company is subject to a change of control and the implied consideration

per share of the Company’s Common Stock pursuant to which the Company or its stockholders have the right to receive in such change

of control equals or exceeds $ 10.21 (or the equivalent fair market value thereof, as determined by the Board following the Closing in

good faith, in the event of any non-cash consideration), then, all of the Earnout Founder Shares that have not previously vested will

vest and shall no longer be subject to the Sponsor Transfer Restrictions.

VWAP” means the dollar volume-weighted average price for Bitcoin (BTC) during any one hundred twenty (120)-hour period ending at

the time of determination, as reported by Bloomberg through its “VAP” function for “XBTUSD BGN Currency” (or

such other comparable calculation methodology as the Disinterested Independent Directors (as defined in the Sponsor Earnout Agreement)

may determine in good faith if such Bloomberg function is no longer available).

If the BTC VWAP cannot be calculated for Bitcoin (BTC)

on such date on any of the foregoing bases, the BTC VWAP of Bitcoin (BTC) on such date shall be the fair market value as determined by

the Disinterested Independent Directors of the Company acting in good faith.

All such determinations shall be appropriately adjusted

for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.

Earnout Agreement

December 3, 2025, the Company and Inflection Points Inc, d/b/a Professional Capital Management (“Seller”) entered into an

agreement (the “Seller Earnout Agreement”), providing that 9,500,000 shares of the Company’s stock (such shares subject

to earnout, the “Earnout Seller Shares”), representing all of the shares of the Company’s stock otherwise issuable

to the Seller, shall be subject to the transfer restrictions set forth in the Seller Earnout Agreement (the “Seller Transfer Restrictions”)

and shall vest and be released from such restriction only if certain price targets are achieved during the Earnout Period.

Earnout Agreement provides that the Earnout Seller Shares shall vest and shall no longer be subject to the Seller Transfer Restrictions

of the Earnout Seller Shares will vest and shall no longer be subject to the Seller Transfer Restrictions in the event that during

the earnout period the closing price of the Company’s stock equals or exceeds $10.21 per share (as adjusted for stock splits,

stock dividends, reorganizations and recapitalizations) for any 20 trading days within any consecutive thirty(30) trading day period

( the “Share Price Trigger Event”).

of the Earnout Seller Shares will vest and shall no longer be subject to the Seller Transfer Restrictions in the event that the BTC

VWAP equals or exceeds $140,000 (a “BTC Price Trigger Event”) during the Earnout Period .

the event that neither a Share Price Trigger Event nor a BTC Price Trigger Event has occurred on or prior to the second anniversary of

the Closing Date, then, subject to the terms and conditions of the Seller Earnout Agreement, on such second anniversary, 100% of the

earnout shares will vest and shall no longer be subject to the Seller Transfer Restrictions.

Notwithstanding

the foregoing, in the event that during the Earnout Period, the Company is subject to a change of control and the implied consideration

per share of the Company’s Stock pursuant to which the Company or its stockholders have the right to receive in such change of

control equals or exceeds $ 10.21 (or the equivalent fair market value thereof, as determined by the Board following the Closing in good

faith, in the event of any non-cash consideration), then, all of the Earnout Seller Shares that have not previously vested shall vest

and shall no longer be subject to the Seller Transfer Restrictions.

30, 2026, these shares have been issued and are outstanding.

and Seller Earnout Agreements

to the Sponsor Earnout Agreement and Seller Earnout Agreement (the “Agreements”) entered into on December 3, 2025, 8,333,333

shares and 9,500,000

shares of the Company’s Common Stock, respectively, remain subject to vesting and transfer restrictions.

The terms of the

Agreements are described in Note 14 to the consolidated financial statements included in the Company’s Annual Report on Form

10-K for the year ended December 31, 2025.

As of June 30, 2026, no vesting events had occurred under either arrangement and the

related shares remained subject to the applicable transfer restrictions.

Segment Information

Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about

operating segments, products, services, geographic areas, and major customers.

Operating segments are defined as components of an enterprise

that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information

is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate

resources and assess performance.

Company’s CODM has been identified as the Chief Executive Officer, who uses cash flows as the primary measure to manage the business

and does not segment the business for internal reporting or decision making.

Accordingly, management has determined that there is only

one reportable segment.

Additionally,

the CODM reviews the fair market value of Bitcoin to measure and monitor value and determine the most effective strategy of investment.

Schedule of Fair Value

CODM assesses performance for the single segment and decides how to allocate resources based on net loss that also is reported on

the unaudited condensed consolidated statements of operations as net loss.

As the Company is in the start-up phase, the CODM

currently reviews general and administrative expenses to manage and forecast cash to ensure that enough capital is available to

achieve its business plan over the short-term period (i.e., less than a year).

The CODM also reviews general and administrative

costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.

Significant segment expenses are consistent with those presented on the condensed consolidated statement of operations

and total segment assets are consistent with total assets presented on the condensed consolidated balance sheets.

Company’s Chief Executive Officer has been identified as the chief operating decision maker (“CODM”).

The CODM reviews

financial information on a consolidated basis for purposes of assessing performance, allocating resources, and making operating decisions.

Accordingly, management has determined that the Company operates as one reportable segment.

CODM primarily evaluates performance using consolidated net loss, cash flows, and liquidity measures.

The CODM also reviews

significant segment expenses that are regularly provided to the CODM, as presented in the table below to manage liquidity and assess

progress against the Company’s operating plan.

Total segment assets are consistent with total assets reported in the unaudited

condensed consolidated balance sheets.

The CODM also monitors the fair market value of the Company’s Bitcoin holdings in

evaluating capital allocation and treasury management strategy.

the Company is focused on executing its growth strategy and is not currently generating significant revenue, resource allocation decisions

are primarily based on liquidity management, operating expenditure, and capital allocation priorities.

The following table sets forth the Company’s

significant segment expenses (in thousands):

of Significant Segment Expenses

Three Months Ended

Six Months Ended

Period from June 10, 2025 (Inception) through

June 30, 2026

June 30, 2025

Operating Expenses

Payroll expenses

One-time bonus

Depreciation and amortization

Other operating expenses (1)

Stock-based compensation

Total Operating Expenses

Operating Loss

Other Income (expense)

Unrealized (loss) gain on digital assets

Realized loss on digital assets

Change in fair value of convertible notes conversion feature

Realized loss on put option liability

Gain on extinguishment of debt

Interest and dividend income

Interest expense

Change in fair value of derivative liability

Other (expenses) income, net

Net (Loss) Income Before Taxes

Income tax benefit

Net (Loss) Income

other operating expenses such as professional fees, insurance, rent, and utility expenses.

Company leases its office facility under a month-to-month operating lease arrangement.

2 unchanged sentences

consolidated balance sheet for this arrangement.

expense for this month-to-month lease is recognized on a straight-line basis and was $ 20 per month for the period from January 2026

through March 2026.

Because the lease is cancellable at any time with no significant penalty, the Company is not committed to future minimum

lease payments beyond the monthly term.

expense for this month-to-month lease is recognized on a straight-line basis and was $ 20 per month for the period from January 2026 through

Because the lease is cancellable at any time with no significant penalty, the Company is not committed to future minimum lease

payments beyond the monthly term.

February 2026, the Company entered into a new operating lease agreement for studio space.

11 unchanged sentences

balance sheet for this arrangement.

components of lease cost for the three months ended March 31, 2026, were as follows:

components of lease cost for the three months and six months ended June 30, 2026 and 2025 were as follows (In thousands):

Schedule of Lease Cost

Three Months Ended

Six Months Ended

Operating lease cost

Short-term lease cost

lease cost and short-term lease cost are recognized on a straight-line basis over the lease term and are included in general and administrative

1 unchanged sentence

Balance Sheet Information

balance sheet information related to the Company’s operating lease as of March 31, 2026, is as follows:

balance sheet information related to the Company’s operating lease as of June 30, 2026, is as follows (In thousands):

Schedule of Supplemental Cash Flows Information Related

to Operating Lease

lease right-of-use asset

lease liability, current portion

lease liability, non-current portion

Operating lease right-of-use

Operating lease liability, current portion

Operating lease liability,

non-current portion

Total operating lease

of Lease Liability

minimum lease payments under the operating lease as of March 31, 2026, are as follows:

minimum lease payments under the operating lease as of June 30, 2026, are as follows (In thousands):

Schedule of Future Minimum Lease Payments Under the

Operating Lease

(remaining nine months)

future minimum lease payments

2026 (remaining six months)

Total future minimum lease payments

present value discount

value of lease liability

Present value of lease

Cash Flow and Other Information

cash flow and other information related to the Company’s operating lease for the three months ended March 31, 2026, are as

cash flow and other information related to the Company’s operating lease for the six months ended June 30, 2026, are as follows

(In thousands):

Schedule of Cash Flow Information Related to Operating Lease

of right-of-use asset

paid for amounts included in the measurement of lease liability

asset obtained in exchange for new operating lease liability

lease term (in years)

rate (as a percentage)

Amortization of right-of-use

Cash paid for amounts included in the measurement

of lease liability

Right-of-use asset obtained in exchange

for new operating lease liability

Remaining lease term (in years)

Discount rate (as a percentage)

Related Party

to the CFO Silvia Acquisition, Inflection Points Inc., an entity controlled by Anthony Pompliano, the Company’s CEO, was the

majority owner of CFO Silvia.

Accordingly, Inflection Points Inc.

was also a selling shareholder in the CFO Silvia Acquisition and

received $ 14.0

million of the total acquisition consideration, consisting of $ 8.1

million of closing equity consideration and $ 5.9

million of contingent earnout consideration.

The contingent earnout shares underlying the contingent consideration are issuable upon

the achievement of specified market-based conditions, including the Company’s common stock reaching trading price at or above

In addition, CFO Silvia was party to two promissory notes payable to Inflection Points Inc.,

an entity controlled by the Company’s Chief Executive Officer.

The outstanding principal balance of the notes were $ 2.4

million as of the Acquisition Date.

In connection with the CFO Silvia Acquisition, cash consideration of $ 1.4

million was used to repay one of the notes, and the remaining $ 1.0

million note was assumed by the Company and repaid following the acquisition.

No amounts remained outstanding as of June 30, 2026.

Subsequent Events

Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the unaudited condensed

consolidated financial statements were issued, and no events, other than discussed below, have occurred that would require adjustments

to the disclosures in the unaudited condensed consolidated financial statements.

with CFO Silvia

April 6, 2026 (the “Closing Date”), the Company completed its previously announced acquisition of CFO Silvia, pursuant to

the Agreement and Plan of Merger, dated as of February 9, 2026 (the “Merger Agreement”), by and among the Company, Silvia

Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger Sub”), CFO Silvia, Inflection

Points Inc, a Delaware corporation (“Inflection Points”), Shain Noor (“Noor” and, together with Inflection Points,

the “Sellers”), and Shain Noor, solely in his capacity as the stockholder representative (the “Stockholder Representative”).

Pursuant to the Merger Agreement, Merger Sub merged with and into CFO Silvia, with CFO Silvia surviving as a direct wholly-owned subsidiary

of the Company (the “Merger”).

Merger was approved by the Company’s stockholders at the Company’s Annual Meeting of Stockholders held on March 27, 2026.

initial accounting for the business combination is incomplete as a result of the timing of the acquisition.

the Closing Date, each issued and outstanding share of CFO Silvia common stock was converted into the right to receive shares of the

Company’s Common Stock, par value $ 0.001 per share, plus contingent rights to receive Escrow Shares and Earnout Shares, as described

aggregate Merger consideration consisted of (i) 8,100,000 shares, which was reduced to 7,516,951 shares (the “Closing Shares”)

to account for certain unpaid liabilities as of the Closing Date, in accordance with the Merger Agreement, (ii) 900,000 shares of Company

stock (the “Escrow Shares”) deposited into escrow account with PNC Bank, N.A.

acting as escrow agent, to serve as security

for indemnification obligations under the Merger Agreement for a period of twelve (12) months, and (iii) up to 9,000,000 additional shares

of Company stock issuable as earnout consideration (the “Earnout Shares”) if the daily volume-weighted average trading price

of Company stock determined as of ten (10) day-period ending the day prior to the applicable determination date equals or exceeds $ 9.00

per share of Company stock (subject to adjustment for stock dividends, splits, and similar recapitalizations) during the five-year period

following the Closing Date.

Closing Shares and Escrow Shares were issued in reliance upon exemptions from registration under Section 4(a)(2) of the Securities Act

of 1933, as amended (the “Securities Act”).

The offer and sale of the Closing Shares and the Escrow Shares has not been registered

under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration

requirements.

Subsequent to quarter-end, the Company entered into an employment agreement

with Shain Noor, Chief Technology Officer, that includes a one-time cash

signing bonus of $ 5.0 million, payable within 90 days of commencement and subject to continued employment.

This represents a contractual

cash commitment that was funded from existing cash on hand in May 2026.

Company evaluated subsequent events through the date the unaudited condensed consolidated financial statements were

of Independent Director and Nasdaq Compliance

July 15, 2026, the Company appointed Benjamin Buchanan as an independent director and member of the audit committee of the Board of Directors.

As a result of this

appointment, the Company regained compliance with Nasdaq corporate governance requirements relating to board and audit committee independence.

On July 21, 2026, the Company received notice from Nasdaq confirming that the compliance matter had been resolved and closed.

Proposed Exchange-Traded Funds

On August 13, 2026, Tidal Trust IV, a Delaware statutory

trust that is not affiliated with the Company, filed a registration statement on Form N-1A with the SEC with respect to five

proposed actively managed exchange-traded funds.

ProCap Investment Advisers, LLC, a wholly-owned subsidiary of the Company, is

proposed to serve as investment sub-adviser to each fund.

The registration statement is subject to SEC review and may be amended,

delayed or withdrawn, and no fund may commence operations until its registration statement has become effective, its shares have

been approved for listing on a national securities exchange and applicable distribution and operational arrangements are in place.

As of the date these unaudited condensed consolidated financial statements were issued, no sub-advisory fees had been earned and no

seed capital had been committed or funded by the Company or its subsidiaries.

Costs incurred in connection with the proposed funds

through the date of issuance were not material.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements